I recently watched an interview with Lacy Hunt, bond guru, and VP of Hoisington Investment Management. It's longish but I think some here might find it interesting, especially in light of today's anemic jobs report and speculation about more QE from the Fed. Hunt is not partisan, offers a sober assessment of our debt problem, and a 4 step solution.
Part 1:
http://www.youtube.com/watch?feature=player_embedded&v=Jc-w3w1Yz8c
Part 2:
http://www.youtube.com/watch?feature=player_embedded&v=fwAjaqhwoek
The "Bang Point", according to Hunt, is that socially disruptive point at which a government is so indebted it can no longer borrow money, and he says the U.S. is moving toward it. In a nutshell...
* We have too much public and private debt.
* An increasing portion of our debt is unproductive/counter productive.
* This debt is negatively effecting our standard of living.
How did we get here?
1. Govt creates over speculation in the economy (he gives examples).
2. This should be corrected through austerity and debt reduction.
3. Trying to cure debt by taking on more debt buys some transitory gain but ultimately weakens the economy.
4. Boosting liquidity through QE does not help in the long run. It creates a gain in GDP but the resulting inflation causes real income to decline.
Here's a long quote from about the middle of the first video:
"The classical economists were of the view that what creates prosperity is the hard work, creativity and ingenuity of our people. And there has been a prevalent view in the U.S. and Europe for a long time that you can create prosperity through financial transaction, and I'm afraid that that's just simply not correct. We have to do it the old fashioned way. And if we use our borrowing capacity, and channel it into more and more unproductive uses, then we're not going to get gains in output per hour, which are essential to rising real wages. And so, rising productivity, rising real wages, are the key to an increasing standard of living. And so, these types of policies, like the Federal Reserve's Quantitative Easing operations, they do benefit SOME people. The stock market has recovered. There have been increases in wealth for some. But unfortunately these type of policies have exacerbated what economists call the income and wealth divide. The majority of our people, their main resource is what they earn from their daily labor, and that's not generating a return. So we're skewing the distribution of income between those that are extremely well off and the majority of our people."
So there you have it lefties. You want to reduce the wealth divide? Stop incurring govt debt so the little guy can generate a return on his daily labor! But read on. He advocates "shared sacrifice" (tax increases) as well.
Four things he says we need to do:
1. Reform Social Security and Medicare (a must). We've made promises we can't keep.
2. Hold the marginal tax rates where they are.
3. Eliminate loopholes in the tax code.
4. Add a 4% to 5% consumption tax (which is preferable to raising marginal tax rates. He references Hobbes for this one.)
Failing to do these things hastens us along toward the "Bang Point", and he fears we won't have the political will to get it done. Anyway, there you go. You're welcome.
Originally posted by SleepyguyI do not care how much of a smarty pants He is, if he is advocating a bigger tax burden on the low and middle income units and nothing extra from wall street and the millionaires n billionaires then he is full of bull morally and economically speaking. Good post though, should be worth at least 30 pages🙂
I recently watched an interview with Lacy Hunt, bond guru, and VP of Hoisington Investment Management. It's longish but I think some here might find it interesting, especially in light of today's anemic jobs report and speculation about more QE from the Fed. Hunt is not partisan, offers a sober assessment of our debt problem, and a 4 step solution.
Pa ...[text shortened]... the political will to get it done. Anyway, there you go. You're welcome.
Originally posted by kevcvs57Well, that's not what he's advocating. He advocates closing tax loopholes. That hits the wealthy.
I do not care how much of a smarty pants He is, if he is advocating a bigger tax burden on the low and middle income units and nothing extra from wall street and the millionaires n billionaires then he is full of bull morally and economically speaking. Good post though, should be worth at least 30 pages🙂
Originally posted by SleepyguyWell successive govts in my country have been closing tax loopholes for as long as I can remember, and I am no 'spring chicken', unfortunately because of all the smarty pants tax lawyers it is like 'herding cats'. The closing loop holes line is a very dry bone to throw at those who are about to get hammered again and cant afford a tax lawyer. IME.
Well, that's not what he's advocating. He advocates closing tax loopholes. That hits the wealthy.
Originally posted by kevcvs57That would depend on the precise way in which the loopholes are closed. In any case, I live in a country with a top VAT rate of 23% and the poor seem to be doing fine.
Dont get to excited He is referring to VAT and a hike in the basic rate, so the less well off will pay a greater proportion of their income than the fat cats.
Originally posted by KazetNagorraOh yeah but sleepyguy's guy is advocating cuts in social/health and welfare provision too.
That would depend on the precise way in which the loopholes are closed. In any case, I live in a country with a top VAT rate of 23% and the poor seem to be doing fine.
Originally posted by KazetNagorraI haven't actually advocated anything at this point. I posted links to an interesting interview and provided my own summary. The consumption tax advocated by Hunt is not the main thrust of it. I know it is long but has anyone watched it?
Sleepyguy is advocating tax hikes? Someone pinch me.
Originally posted by SleepyguyYou assume that the powers that be want to fix the situation. I'm not so sure. For example, we hear rumblings from the left that mankind is destroying the planet in various ways. So to stop him, or slow his "progress", then they will just wreck the economy. If this is true there is no convincing these people and no compromise. They simply have to be defeated, or if they succeed, forced out of positions of power that try and "pick up the pieces" after the fact because they will glibly blame capitalism and/or "W" and carry on where they left off.
I haven't actually advocated anything at this point. I posted links to an interesting interview and provided my own summary. The consumption tax advocated by Hunt is not the main thrust of it. I know it is long but has anyone watched it?
Just a thought.
Originally posted by whodeyA weirdly illogical paranoid train of thought. Since when were the left more interested in the environment than the economic welfare of the majority of any given population.
You assume that the powers that be want to fix the situation. I'm not so sure. For example, we hear rumblings from the left that mankind is destroying the planet in various ways. So to stop him, or slow his "progress", then they will just wreck the economy. If this is true there is no convincing these people and no compromise. They simply have to be defe ...[text shortened]... er the fact. In the end they will glibly blame capitalism and/or "W".
Just a thought.
Why do you use the phrase 'left' to describe anyone, or any concept you dislike, it displays a laziness of incredible proportions.
I do not like pedophiles or right wingers, but I would not say they are the same thing.
Originally posted by whodeyOn what basis do you claim I have assumed anything, whodey? Except for saying the interview was interesting, I haven't even expressed an opinion in this thread. Jeez.
You assume that the powers that be want to fix the situation. I'm not so sure. For example, we hear rumblings from the left that mankind is destroying the planet in various ways. So to stop him, or slow his "progress", then they will just wreck the economy. If this is true there is no convincing these people and no compromise. They simply have to be defe ...[text shortened]... l glibly blame capitalism and/or "W" and carry on where they left off.
Just a thought.
Originally posted by SleepyguyYour OP has quite a bit of opinion in it.
On what basis do you claim I have assumed anything, whodey? Except for saying the interview was interesting, I haven't even expressed an opinion in this thread. Jeez.
So there you have it lefties. You want to reduce the wealth divide? Stop incurring govt debt so the little guy can generate a return on his daily labor! But read on. He advocates "shared sacrifice" (tax increases) as well.
Originally posted by kevcvs57If carbon emissions are really destroying the globe, what should be done? Economics tells us that a reduced economy equals reduced carbon emissions. No economy equals no carbon emissions.
A weirdly illogical paranoid train of thought. Since when were the left more interested in the environment than the economic welfare of the majority of any given population.
Why do you use the phrase 'left' to describe anyone, or any concept you dislike, it displays a laziness of incredible proportions.
I do not like pedophiles or right wingers, but I would not say they are the same thing.
Also, you hear rumblings from the left wingers about populations not being able to sustain themselves and resources being scarce etc. In a country like the US with a Constitution to contend with it is troublesome to try and manipulate people into a China like ban on having more children. So in order to erradicate it you must first erradicate the government which is governed by it. And since overcoming the US through military conquest is out of the question, that leaves overcoming the US via economics.
If one were really to believe that the fate of humanity depends on controlling carbon emissions and population levels etc, then I think you would feel an obligation to stop these things no matter the cost. Things like cap and tax are a joke in terms of seriously addressing carbon emissions.
And I do use the term "left" because all of these people are left wingers. At least, I have never seen any right wingers say these things. If they are out there then so what, then they are nuts as well.
Originally posted by SleepyguyDo you really think that those in government don't know these things? The bottom line is they don't care, period. I'm simply offering some light as to why.
On what basis do you claim I have assumed anything, whodey? Except for saying the interview was interesting, I haven't even expressed an opinion in this thread. Jeez.
And this seems to be a global phenomenon. At least, the US and Europe seem to be on an economic suicide mission together. Perhaps it is intentional with the plans to form a global government or economic system. I am assuming this because as I said, I refuse to believe that those in government are really that stupid to not see the economic devestation of their policies. So no matter the reason for this path of the powers that be, rest assured it is all about control. Really it is a natural progression for governments around the world that struggle to gain more and more control over those they govern and the world at large.